IBM, Intel collapse on Wall Street as coronavirus concerns rise

NEW YORK (Reuters) – Major Wall Street indices slipped on Friday, dragged down by losses in blue chip tech, mainstays Intel and IBM in the wake of their quarterly results, as hopes of a full economic reopening in the coming months.

IBM Corp fell 9.83% and was the main drag on the Dow Jones Industrial Average after missing quarterly revenue estimates, penalized by a rare drop in sales of its software unit.

Intel Corp lost 8.93% as post-profit comments from new CEO Pat Gelsinger suggested the lack of a strong membership in outsourcing.

“The challenge for the (tech) industry at this point in the earnings season is how far its earnings growth forecast has been driven in 2020 and may not be available in 2021,” said Rob Haworth. , Senior Investment Strategist at US Bank Wealth Management in Seattle.

However, losses in the tech sector were offset by gains from Microsoft Corp, Apple Inc and Facebook Inc, which helped contain declines in major US stock indices.

Shares of energy, financials, industrials and consumer discretionary, which have been among the best-performing sectors since the US election in November, fell the most on Friday.

The S&P 500 and the Nasdaq cut some losses after the opening bell as data showed US manufacturing activity surprisingly hit its highest level in more than 13-1 / 2 years in early January, unlike to a disappointing result in the purchasing manager’s data. in Europe earlier.

At 2:18 p.m. ET, the Dow Jones Industrial Average fell 121.68 points, or 0.39%, to 31,054.33, the S&P 500 lost 9.35 points, or 0.24%, to 3,843, 72 and the Nasdaq Composite fell 14.42 points, or 0.11%, to 13,516.49.

Despite the weakness, all three major indices were pegged for weekly gains, with the high tech Nasdaq continuing its best weekly performance since November 6, as investors stacked in Alphabet Inc, Apple Inc and Amazon.com Inc in anticipation of their earnings reports. in the next weeks.

As stock valuations approach levels not seen since the Dotcom era, some market participants have said that the new COVID-19 variants and the hiccups in vaccine rollouts pose near-term risks.

During a White House event on Thursday, President Joe Biden said the death toll in the United States from the pandemic would likely reach 500,000 next month.

“If we are forced to keep the economy closed and it takes longer than we would like for vaccinations and coronavirus vaccinations, it will be a little harder in the market than people apparently had. expected, ”Haworth said.

The Senate Finance Committee unanimously approved Janet Yellen’s appointment as the first female Treasury Secretary, saying she would easily get full Senate approval.

Falling issues outnumbered those that rose on the NYSE by a 1.54 to 1 ratio; on the Nasdaq, a ratio of 1.21 to 1 helped the declines.

The S&P 500 posted 12 new 52 week highs and no new lows; the Nasdaq Composite recorded 128 new highs and 6 new lows.